Understanding Section 44AB of the Income Tax Act for AY 2021-22
If you are a taxpayer in India, it is important to understand the various provisions of the Income Tax Act that apply to you. One such provision is Section 44AB, which pertains to tax audit requirements for certain businesses. In this blog, we will take a closer look at Section 44AB of the Income Tax Act for AY 2021-22.
What is Section 44AB of the Income Tax Act?
Section 44AB of the Income Tax Act requires certain taxpayers to get their accounts audited by a chartered accountant. This section applies to the following entities:
- Businesses with a turnover of more than Rs. 1 crore
- Professionals with gross receipts of more than Rs. 50 lakhs
If your business or profession falls under either of these categories, you are required to get your accounts audited under Section 44AB.
When should the audit be conducted? The audit under Section 44AB should be conducted before the due date for filing the tax return. For AY 2021-22, the due date for filing tax returns for most taxpayers is September 30, 2022. However, the due date may vary for certain entities such as companies and taxpayers who are subject to transfer pricing regulations.
What is the scope of the audit? The audit under Section 44AB is not just limited to checking the mathematical accuracy of the books of accounts. The chartered accountant conducting the audit is also required to verify compliance with various provisions of the Income Tax Act such as deductions, exemptions, and allowances. The auditor is also required to provide a report in the prescribed format along with the tax return.
What are the consequences of non-compliance? If you are required to get your accounts audited under Section 44AB but fail to do so, you may be subject to penalties. The penalty for non-compliance is 0.5% of the total turnover or gross receipts, subject to a maximum penalty of Rs. 1,50,000.
Conclusion:
Section 44AB of the Income Tax Act is an important provision that applies to certain businesses and professionals in India. If you fall under the purview of this section, it is important to ensure that you comply with the audit requirements to avoid penalties. You can consult a chartered accountant to help you with the audit process and ensure that you are fully compliant with the Income Tax Act.
Read more useful content:
- section 145 of income tax act
- section 10e of income tax act
- section 9 of the income tax act
- section 94b of income tax act
- section 206aa of income tax act
Frequently Asked Questions (FAQs)
1 Income Tax:
Q:1 What is the deadline for filing income tax returns in India?
A: The deadline for filing income tax returns in India for most taxpayers is July 31st of the assessment year. However, this deadline can be extended by the government.
Q:2 What is Form 16?
A: Form 16 is a certificate issued by an employer to an employee, which contains details of the employee’s salary, TDS deducted, and other deductions.
Q:3 What is the penalty for not filing income tax returns on time? A: If you do not file your income tax returns on time, you may be subject to a penalty of up to Rs. 10,000.
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Mutual Funds:
Q:4 What are mutual funds?
A: Mutual funds are investment vehicles that pool money from multiple investors to invest in various securities such as stocks, bonds, and other assets.
Q:5 What is the difference between growth and dividend mutual fund schemes?
A: In a growth mutual fund scheme, the gains are reinvested, and the value of the investment grows over time. In a dividend mutual fund scheme, the gains are distributed to the investors periodically in the form of dividends.
Q:6 What is the expense ratio of a mutual fund? A: The expense ratio of a mutual fund is the annual fee charged by the mutual fund company for managing the fund. It includes expenses such as administrative costs, marketing expenses, and fees paid to the fund managers.
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Insurance:
Q:7 What is a term insurance policy?
A: A term insurance policy is a type of life insurance policy that provides coverage for a specific period or term. If the insured person dies during the term of the policy, the beneficiary receives a death benefit.
Q:8 What is a health insurance policy?
A: A health insurance policy is an insurance product that covers medical expenses incurred by the insured person. It can cover expenses such as hospitalization, surgery, and other medical procedures.
Q:9 What is the difference between a rider and a regular insurance policy?
A: A rider is an add-on to a regular insurance policy that provides additional coverage for specific events such as accidental death or disability.
